National Credit Regulator meeting follow-up, Committee Oversight Reports; 2nd Quarter Committee Programme

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Trade and Industry

16 March 2016
Chairperson: Ms J Fubbs (ANC)
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Meeting Summary

As the first item on the agenda, the Chairperson tabled notes from the meeting on 15 March 2016 with the National Credit Regulator (NCR) and took Members through some of the conclusions. It was felt that “borrowers” would be a better word to use than “consumers”. Members raised the point that the Committee had requested that the NCR should provide a list of any investigations that had been referred to the National Prosecuting Authority for criminal prosecution, with a note of the types of cases, but it was decided to channel this request to the Table Staff. Another point was that the NCR had been asked to provide specific details on the conviction rates of those charged for misuse of ID documents and social security documentation, and more information on demographics, age and gender of the beneficiaries of mortgage loans, and car finance agreements. Both Members making suggestions were asked to draft something for approval by the Committee.

The Committee considered and adopted (with amendments) the Committee's report on its oversight visit to KwaZulu Natal. Questions were asked around tariff protection against steel products and the reasons for locally produced material to cost more than imported, and the background to this,the agreement between the Department of Trade and Industry and steel producers was outlined, and the point was made that exchange controls played a huge part. It was suggested that more facts on this were needed. Another point related to the difficulties in a blanket application of the national demographic breakdown in terms of race, and it was stressed that increased training and skills were needed since it was found that there were too few applicants with the right skills and most of those with those skills came from one demographic background. The Minister was to be requested to review timeframes for companies to comply with the new BBBEE criteria and there was brief discussion whether this was intended to refer to all companies or to those offering strategic benefits. In addition, the NCR was being asked to expedite the process of considering and developing the preferred trader option. Another point in relation to ITAC would be checked to see whether the website was up to date.

The Committee considered and adopted the draft Report on the International Astronautical Congress attended by some Members. Youth were to be encouraged to attend the 2017 Congress. The report concluded that South Africa should continue to expand its manufacturing, engineering and knowledge production in this field, and explore measures to increase collaboration within Africa primarily, but not excluding those outside Africa. The Minister was asked to consider expediting the industrialisation of the space industry.

The Committee considered and adopted its second quarter programme, and minutes from the meetings on specific focus that it was believed that the Committee could consider, and the Chairperson agreed.
1, 2, and 8 March 2016. 

Meeting report

Meeting with National Credit Regulator on 15 March 2016: matters arising
The Chairperson tabled notes made from the meeting on 15 March 2016 with the National Credit Regulator (NCR) and took Members through some of the points.

Point number 2 stated “the NCR should conduct an immediate secondary research on possible measures to ease the burden of debt on poorer consumers. This should cover

  • The demographics and income group of the affected consumers.

  • The advantages and disadvantages of debt forgiveness for identified low income group

  • The implementation of debt forgiveness in other countries including the impact thereof”.

The Chairperson suggested that the wording should refer to ‘borrowers’ instead of ‘consumers’. She noted that it was arguable as to who fell within the lower income groups of “poorer consumers” and thus it would be more precise to refer to borrowers.

Mr D Macpherson (ANC) said that the committee had also requested that the NCR should provide a list of any investigations that had been referred to the National Prosecuting Authority for criminal prosecution. The Committee needed to know the nature of the cases.

The Chairperson said that this was an additional point. When this point was raised during the meeting, it was said that there was a need to consult with the Table Staff, since there are procedural protocols.

The Committee Secretary noted that the Parliamentary Rules and Constitution are very clear on that point and that the Committee may request an investigation.

The Chairperson asked that Mr MacPherson should craft something for approval on that point.

Mr B Mkongi (ANC) said that some of his proposals had not been included in the “Matters Arising” portion. Those were

  • The NCR should provide the Committee with the conviction rate of people who had been reported to the South African Police Service (SAPS) for misuse of IDs and SA Social Security Agency (SASSA) cards.

  • The NCR should provide the demographics, age and gender of the beneficiaries of mortgage loans, as well as for loans for credit vehicle purchases.

The Chairperson also asked Mr Mkongi to craft his point, for review before the close of the meeting.

Draft Oversight Report on visit to KwaZulu Natal

The Chairperson asked Members to particularly consider and comment on the conclusions in the draft Committee Report on the oversight visit (the Report).

Mr Macpherson asked why it was that, despite 10% tariff protection against certain imported steel products, local prices remained 30% to 40% more expensive than imported steel? This was compounded by the 10% increase in local prices from AMSA to fabricators, even though this is a violation of the pricing agreement between the Department of Trade and Industry (dti) and local manufacturers. He suggested that this increase will have a major impact on margins at a time when all businesses are struggling within the industry and will increase the costs of finished products that government procures, due to the preferential procurement policy.

The Chairperson pointed out that, although she was not quoting the Minister of Trade and Industry directly, he had said that in order for such manufacturers and producers of steel to remain open, this increase would have to be put in force.

She asked the Committee's Content Advisor to comment also. She asked that Mr Macpherson talk to that point.

Mr Macpherson said there was an agreement put in place by the dti and local steel producers after recommendation by the International Trade Administration Commission of South Africa (ITAC) that there would be no increases in prices to local buyers, in exchange for the 10% tariff increase. This had not taken place. More disturbing was the fact that the Deputy Minister said he knew nothing about it. The Minister may not even understand what the deal is about and how it continued, repeatedly, to be violated at the expense of local manufacturers.

The Chairperson said the exchange rate dramatically affected the different measures that were in place. Exchange rates dramatically affected the price. The real fact of the agreement is needed to better understand this concern.

Mr M Kalako (ANC) proposed that the real fact of the agreement should be provided. This question was one of the concerns raised during the Committee’s oversight.

The Chairperson said the difficulty was that there was, as yet, no actual agreement, so nothing was definite. The point was, however, that for a long time the Committee had not been happy with the price of steel because of the impact of agreements, but the surrounding facts would have to be known.

Mr Macpherson insisted that there was an agreement.

The Chairperson said that when agreements were made, they remained subject to situations that surround the subject. The exchange rate cannot be ignored.

Mr Koornhof asked how the exchange rate impacted on the price.

The Chairperson said the question was based on the price of imported steel.

Mr Koornhof asked the reason for the price increase from AMSA, asking whether here too the exchange rate was the reason for the increase.?

The Chairperson stated that the issues had become conflated and that was the reason the Committee needed to seek clarity on that point.

Mr Kalako referred to the concluding part of the Report, and raised a concern on point 9.2, which noted that the Committee was concerned that the blanket application of the national demographic breakdown in terms of race may hinder regional or local companies’ abilities to comply with the required management and skills development criteria in the revised Codes of Good Practice. This point was visited in the last meeting with Unilever; the problem there was that there was no problem with the demographics in iKwazulu-Natal but the issue was that the majority of the population did not have the skills which are required. Most of the people with skills are from the Indian communities. He thought that the Committee should not make this its concern. He said that the majority of the people were not exposed, so there was not a problem with employment.

The Chairperson said that although most companies were willing to purchase from local black suppliers, there were challenges, such as when there were no black suppliers in the industry or when suppliers were not able to supply inputs that met the requisite standards. The Committee wanted the intensive Supplier Development programmes to fill this gap and improve global competitiveness of the companies. There should an increase in training and skills in this area.

Mr Kalako said that what the Chairperson had set out now was essentially covered in point 9.3 and it is different from the question of local suppliers and procurement. There is no basis for national demographics. The understanding, according to Unilever, is that there are too few black applicants and also few women, with predominantly Indian people offering the right skills. Unilever has also put programmes in place in the schools to help with the skills building. He suggested that paragraph 9.2 was therefore superfluous.

The Chairperson asked whether any other Members would agreed with Mr Kalako's suggestion that 9.2 be deleted.

The Chairperson then pointed out an omission in regard to 11.1, which reads that ‘the Committee recommends that the House requests that the Minister of Trade and Industry should (set):

  • The timeframes for companies to meet the new BBBEE criteria to access incentives provides companies some time to mitigate the impact of complying with the new Codes of Good Practice.’

She suggested that phrase should rather read: ‘consider reviewing the timeframes for companies to meet the new BBBEE criteria to access incentives to provide companies with sufficient time to mitigate the impact of complying with the new Codes of Good Practice.

Mr Macpherson said the point raised by the companies was that a lot of companies are struggling to realign themselves to the new Code, and need time to do that.

The Chairperson said that there is a need to look at companies contributing to the strategic objectives of the country, rather than every company. Acting BBBEE Commissioner, Ms Zodwa Ntuli, had pointed out that such companies were being looked at and the new Commission was trying to provide them with more time. The clause reads ‘…timeframes for companies’ , but she questioned whether this referred to Wall companies”. She pointed out that the BBBEE could not be considered in the same light as static legislation.

Mr Macpherson said that the Committee had been told that 62% of black owned companies cannot meet the new regulation. It would be fair to say that a lot of companies were struggling to realign themselves with the new Codes.

The Chairperson said that no matter what these companies were contributing to the economy, a strategic outcome would have to be found.


 

Mr A Williams (ANC) said the new Code was not only about ownership but also the control of the company. The black shareholders may have 62% ownership but still not have the real control of the company. With regards to the time issue, he thought that the reference should be around strategic companies. There should not be a blanket application, because people were not willing to comply with this code and they tended to use the excuse of insufficient time. There may not be a need for a time limit, but he thought that it was more correct to say that the Minister of Trade and Industry should look into the companies that provided strategic opportunities to South Africa, with the possibility of letting them to have more time. It should not be a blanket allocation.

Mr G Hill-Lewis (DA) said that the issue was about companies that wished to access Department of Trade and Industry (dti) incentives. The companies are exporters or manufacturing companies and they are the strategic companies. It is not a blanket application for all companies.

The Chairperson reminded the Committee that the incentives are very broad.

Mr Hill-Lewis said there are three broad incentives that the dti had set aside and these included export incentives, manufacturing incentives and critical infrastructure incentives.

The Chairperson suggested that there should be a general time frame, but there should not be a general application.

Mr Mkongi proposed that the phrase should then read as follows ‘the Committee recommends that the House requests that the Minister of Trade and Industry should look at providing support to strategic companies struggling to meet the required timeframes for compliance with the new BBBEE, especially those that support the national goals and transformation”.

The Chairperson said that she still wanted to avoid the situation where the recommendation would be for a blanket application. The Committee could not go out and do oversight over every company but it could only visit a few companies. The few visited would enable the Committee to make recommendations that will apply across to other companies.

She moved on to Point 11.4 which read that ‘the NCR must conclude their consideration of the preferred trader system to be tabled before the Portfolio Committee before the election recess.” She suggested that this should rather read that the NCR should expedite the process of considering and developing a preferred trader option.

Mr Macpherson said it could be more forceful, since the NCR mentioned in its presentation that it would be delivered in June, but the problem is that the Committee would be on recess at that time. The NCR can submit a little earlier before the Parliament rise.

The Chairperson reminded Members that they remain a Member of Parliament until the day of election for new Members. Even during the constituency period, communication can still continue. NCR indicated a June date, but may not have realised that the Committee will be rising in May, and the Committee did not know that either.

She suggested new wording as follows: “it would be appreciated if the NCR could expedite the process of considering and developing a preferred trader option so that the Committee receives it before Parliament adjourns for its constituency period in June”.

The Chairperson then referred to Point 11.5 which read: “Enforcing the ITAC agreement on steel pricing that producers may not increase their prices to downstream manufacturers in return for a 10% tariff on imported steel or conduct a review of the agreement as dictated by ITAC”. She suggested changes to this also, to read: “Enforcing the decision to increase the customs duty on certain steel products in a manner that would ensure that downstream manufacturers benefit from the conditions set.”

Mr Hill-Lewis suggested that there be a reference to “enforcing the conditional decision…”

Mr Kalako said that the Department's website did set out a condition.

The Chairperson said she is not looking at the website, and said that this was a little problematic since most of the sites are not up to date. If, however, the Committee was satisfied that it was up to date, then the Committee would go along with that.

Members adopted the Report, with the amendments.

Draft Committee Report on the International Astronautical Congress (IAC)

The Chairperson said that most Members of the Committee did not attend the International Astronautical Conference (IAC), because of budgetary constraints.

The Chairperson asked why the industry of space fell within the Department of Trade and Industry. She talked about the developments that space exploration had added to humanity, mainly through avoidance of disasters. The Chairperson of the Committee on Rural Development and Land Reform was also among the delegates. She noted that there was extra emphasis by the organisers to all member countries and Parliaments on why it would be necessary to encourage and finance more youth to attend the Congress. Other countries are sending youths; South Africa was able to fund couple of members from dti and elsewhere. One of the SA representatives won the Young Space Leader Award. This award recognises and acknowledges exceptional individuals under the age of 35 who demonstrate leadership by contributing to astronautical science, through academic and professional activities, reaching out to other young people and to their community to share knowledge and experience, engaging colleagues in the international space community, and contributing to the work of IAF committees.

The Chairperson encouraged Members to attract youths to go for the 2017 congress.

The delegation to the Congress set out the following conclusions, as noted in the Report, that:

  • South Africa should continue to expand its manufacturing, engineering and knowledge production in this field. It should explore measures to increase collaboration with other countries in Africa as part of the regional and economic integration initiatives, but not excluding collaboration with countries outside of Africa.

  • The Minister of Trade and Industry should consider expediting the industrialisation of the space industry as it would contribute to the development of new generation jobs, innovation and technological advances in the country.

Members adopted the Report.

The Chairperson reminded members that the next IAC is on September 2016 in Mexico.

Committee's Second Quarter 2016 programme
The Chairperson said initially that the Committee is supposed to come back to Parliament on 12 April, but there was some debate in different forums about dates of 4 or 5 April and that was the reason that the distributed 2nd quarter programme to members read 5 April. However, if the dates were not confirmed by the Joint Programme Committee, which was due to sit on 17 March, then the Committee would go back to 12 April, and issues set for 5 and 6 April would move to 17 and 18 May.

Mr Macpherson asked how the colloquium on the local public procurement had been structured, and whether it would only include local companies.

The Chairperson responded that if it is a full day, then there would be no problem, but if it were shifted to May then Fridays would be reinstated. The intention was also to engage with the private sector as well. If the Committee sat a full day and ran out of time then the Friday would apply. Fridays would not be used regularly, but when necessary.

Mr Macpherson asked if Members could send recommendations to the Committee Secretary on areas of specific focus that it was believed that the Committee could consider, and the Chairperson agreed.

Mr N Koornhof (ANC) pointed out a technical error for the day of 16 of June, and added that it is a public holiday.

Mr Kalako said that the Committee would not sit as a subcommittee on 17 June, which was within the constituency period.

The Committee adopted the programme.

Minute adoption
1 March 2016

The Committee dealt with the minutes on the meeting with the National Metrology Institute of South Africa (NMISA), National Empowerment Fund and a report back on gambling.

The Committee noted that in relation to the NMISA briefing, it would be important to retain and continue to consider a review of further funding during the Budgetary Review and Recommendation Report (BRRR) process in the next financial year.

The adoption of the report on the Gambling Committee was postponed.

It was agreed that in relation to the National Empowerment Fund, the Committee should continue to engage the Minister on the funding model.

2 March 2016
It was noted that this meeting dealt with a briefing on the localisation strategy and public procurement drive. The resolution reached was not on local public procurement, but it was in relation to the verification. That was the critical issue, not merely the public procurement.

Members adopted the minutes

8 March 2016
It was noted that this meeting was a briefing by the dti on its 2016 Annual Performance Plan & 3rd quarter 2015 performance.

The Committee would be required to consider the Strategic plan of the Department and the entities shortly. That detailed document would be tabled for the Committee’s consideration and the Committee would also be advised of proposed dates.

The minutes were adopted.

The meeting was adjourned.


 

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